Chinese official raises specter of ‘financial war’ with the United States

As the trade row between the United States and China heats up, a previously dovish senior Chinese government economist has taken the gloves off, quoting Mao Zedong in an interview with SpiegelOnline: “You lead your war, and I lead mine.”

Mei Xinyu, a member of the Commerce Ministry’s Chinese Academy of World Trade and Economic Cooperation, warned that the two economic giants might be on the brink of a “financial war” with a potential outcome that is “beyond our imagination.”

…He warned that China could sell its US government bonds (it owns more than $1 trillion worth) and dollar reserves, even if doing so is economically painful.

He said, “The US and China are the largest economies and largest financial markets in the world. But in the US, the financial sector plays a much bigger role than in China. In that sense, the US is vulnerable here, so of course, that’s an option.” [To READ at Asia Times…]

“Thank you, that’s my question,” Maher added. “I feel like the bottom has to fall out at some point, and by the way, I’m hoping for it.”

“I think one way you get rid of Trump is a crashing economy. So please, bring on the recession. Sorry if that hurts people, but it’s either root for a recession or you lose your democracy.” [To CONTINUE READING at Washington Examiner…]

Of course, the markets may not experience any further troubles this summer. The economy is strong, earnings are good, and trade tensions may diminish. But it is important to be aware that both China and Russia claim the ability to cause a crash at will. And, at least some of President Trump’s opponents are secretly hoping they do it.